Microsoft Says It Is Cooperating With Japan Antitrust Probe Into Azure Practices

Japan’s Fair Trade Commission is investigating whether Microsoft may have curtailed customers’ ability to use rival cloud services by restricting its software from operating on non-Azure platforms, according to Bloomberg and other media reports earlier this week. The inquiry centers on potential anti-competitive behavior tied to the company’s cloud offerings, per Bloomberg.

Speaking at a Bloomberg event in Tokyo on Thursday, Microsoft Japan President Miki Tsusaka said the company is operating in accordance with local regulations. “Japan is one of the most significant strategic markets for Microsoft and everything we do is operated with integrity,” she said. “I hope that is reflected in the market in terms of day-to-day practices.” Tsusaka declined to provide additional details about the investigation.

The probe comes as competition intensifies in Japan’s fast-growing cloud computing sector. The country, Asia’s second-largest economy after China, has become a critical battleground for global providers such as Amazon.com Inc.’s AWS and Alphabet Inc.’s Google Cloud. Microsoft announced in 2024 that it would invest approximately $2.9 billion over two years to expand its artificial intelligence and cloud infrastructure footprint in Japan, according to Bloomberg.

Related: Japan Steps Up Tech Oversight With Microsoft Cloud Probe

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Demand for cloud services is expected to accelerate as generative artificial intelligence applications require increasingly powerful data center capacity. Research firm IDC projects that Japan’s cloud market will reach ¥19 trillion ($121 billion) in annual revenue by 2029, nearly double its 2024 size, per Bloomberg. While Japan has domestic data center operators and is working to strengthen local cybersecurity capabilities, US-based technology companies account for a significant share of the market.

The Japanese investigation coincides with heightened scrutiny in the United States, where antitrust regulators are examining Microsoft’s licensing arrangements and broader business conduct to determine whether the company holds an unlawful monopoly in enterprise computing, including cloud software and AI products, according to Bloomberg.

Japanese regulators have indicated they want to preserve fair competition ahead of the anticipated surge in cloud demand. The government also views digital transformation and AI adoption as crucial to addressing demographic challenges, including a shrinking and aging population.

Tsusaka said Japan stands to benefit significantly from artificial intelligence but cautioned that workplace culture could slow progress. “If we don’t change the way we work, we have the same meetings, we have the same PDFs and Power Points and whatnot,” she said.

At the same time, she expressed optimism about the pace of adoption. “This time around, Japan is few points behind, but not that far,” she said. “I see growth, I see change, I see companies and individuals adopting.”

Microsoft has not publicly disclosed further details about the scope or timeline of the Japanese regulator’s review.

Source: Bloomberg